Company Registration No. 05047778 (England and Wales)
HLMAD LIMITED
T/A HLM ARCHITECTS
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
HLMAD LIMITED
T/A HLM ARCHITECTS
COMPANY INFORMATION
Directors
C Liddle
N Beecroft
R O'Neil
M Staniland
J Clarke
D Cafferty
K Mosley
S Bell
L Robertson
M Scherdel
J Wilson
P Watson
M Earnshaw
(Appointed 16 December 2020)
S Chenery
(Appointed 16 December 2020)
Secretary
K Mosley
Company number
05047778
Registered office
Wool + Tailor Building
Fifth Floor
10-12 Alie Street
London
E1 8DE
Auditor
Johnston Carmichael LLP
227 West George Street
Glasgow
G2 2ND
HLMAD LIMITED
T/A HLM ARCHITECTS
CONTENTS
Page
Strategic report
1 - 3
Directors' report
4 - 5
Directors' responsibilities statement
6
Independent auditor's report
7 - 10
Profit and loss account
11
Balance sheet
12
Statement of changes in equity
13
Statement of cash flows
14
Notes to the financial statements
15 - 26
HLMAD LIMITED
T/A HLM ARCHITECTS
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2021
- 1 -
The directors present the strategic report for the year ended 31 March 2021.
Review of the business
The business continues to be well respected in its chosen marketplaces of Healthcare, Education, Justice & Emergency Services, Living & Communities, Asset & Workplace, Hospitality and Defence. We are delighted that the quality of our work and how we engage with our employees and wider community has again led to winning numerous awards during the year including being recognised as Employer of the Year by the Architects Journal and Architectural Practice of the Year by Building Magazine.
We continue to achieve our targets for architectural design quality, business profile and financial performance. Our strategy of continuing to actively manage the business continues in a commercial manner based upon the provision of sustainable, high quality design services to our clients with the Directors leading the design process, encouraging, motivating and leading the team by example. This is reflected by the number of business awards and short listings achieved.
Alongside this we continued to shape the business to reflect the volatile economic environment and market conditions by focusing on being creative, innovative and as flexible as possible about the way we work together.
Our strong financial footing has not only allowed us to meet the challenges of the economic environment, but also allowed us to pursue our strategy of continuing to invest in our UK business whilst simultaneously retaining our international presence.
Our aim is to make the maximum social impact to society through our activities and the places we create. Through thoughtful design we consciously take account of economic, environmental and social elements to inform the collective decisions we make about where to invest and our time and resources. It also helps us to understand and appreciate the positive difference we can make to the communities in which we operate.
During the year, ownership of the group transitioned to Employee Ownership with 100% of the business now held in Trust on behalf of employees. This further strengthens engagement with our employees and aligns with the culture of the business, enhancing the one team ethos and an ability for all employees to benefit from our ambition, drive and successes.
Principal risks and uncertainties
The principal risk facing the company relates to the ongoing uncertainty resulting from the COVID-19 pandemic.
The company continues to closely monitor the constantly changing risk of the global COVID-19 pandemic. The potential impact will depend on the severity and length of the UK outbreak. The key risks to our operations include: • Disruption to our key sectors through restrictions on movement and uncertainty of future demand; • Operational issues involving greater emphasis on home and remote working; • The impact on our colleagues, especially those who are at high risk and need to self isolate; • Impact on existing client base and pressure on fee levels; and • A prolonged significant outbreak in the UK resulting in delay to project decisions.
Other key risks can be summarised under the following categories:
-
Brand reputation, product and service
-
Competition
-
Business interruption and infrastructure
-
Continuing to attract and retain the right staff and management team
-
Working capital management
-
IT systems, sensitive data and cyber risk
The company manages these risks through a process of policies and controls which are set by the board and implemented and managed by the management team. All risks are assigned to owners and are reviewed regularly to further assess the extent and effectiveness of the controls.
The group seeks to diversify risks wherever possible, particularly through developing work in new business sectors and geographical areas.
HLMAD LIMITED
T/A HLM ARCHITECTS
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2021
- 2 -
Results and performance
The company’s performance during the year ended 31 March 2021 was as follows:
-
Turnover amounted to £11,844,227 (2020: £12,953,802)
Operating profit above is affected by the inclusion of management charges paid to the parent company during the year. Overall the directors are satisfied with the financial performance of the company given the challenges faced by the company during the year.
Business environment
The design market is highly competitive within a number of the sectors in which the company operates. Many other businesses seek to operate in the market which leads to aggressive pricing. The impact of advances in technology has been enormous and it is essential that we continue to keep abreast of advances in this area.
Strategy
The company’s success is dependent on the proper selection of opportunities in the sectors in which it operates. We believe that having diversity in sectors, services and geographical spread will enable us to maintain our position and market share.
The company will continue to concentrate on achieving growth in its existing sectors whilst striving to improve efficiencies and diversification.
Key performance indicators (KPIs)
We have made significant progress throughout the year in relation to key elements of our strategy. The Board monitors the progress of the company by reference to the following KPIs:
2021
2020
Turnover
£11.84m
£12.95m
Gross margin
39.17%
45.50%
EBITDA
5.29%
4.90%
The board remain confident that the business is well placed to continue to win major contracts in its chosen sectors and continues to see an improving pipeline of opportunity.
HLMAD LIMITED
T/A HLM ARCHITECTS
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2021
- 3 -
Future prospects
As part of the ongoing strategy to develop a business that is design-led, entrepreneurial and robust in the face of risks associated with the cyclical nature of the UK construction market, the company continues to invest in new service offerings, new sectors and new geographical markets.
Strategic management
Fostering citizenship and improving society through architecture and design is the foundation of our collective business purpose. We have built a reputation for design excellence and expertise across our key sectors with a focus on solving our client’s challenges and mindful of the impact that design can have on people, communities and society.
We seek to be agile and adaptable yet maintain a rigour that keeps design excellence as our essence and is achieved through a workplace of like-minded people – a profitable business that offers opportunity and is enjoyable.
R O'Neil
Director
22 December 2021
HLMAD LIMITED
T/A HLM ARCHITECTS
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2021
- 4 -
The directors present their annual report and financial statements for the year ended 31 March 2021.
Principal activities
The principal activity of the company continued to be that of the provision of architectural, landscape and urban design, interior design and environmental design services.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
C Liddle
N Beecroft
R O'Neil
M Staniland
J Clarke
D Cafferty
K Mosley
S Bell
L Robertson
M Scherdel
J Wilson
P Watson
M Earnshaw
(Appointed 16 December 2020)
S Chenery
(Appointed 16 December 2020)
Results and dividends
The results for the year are set out on page 11.
Ordinary dividends were paid amounting to £960,000. The directors do not recommend payment of a final dividend.
Auditor
The auditor, Johnston Carmichael LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s
auditor
is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s
auditor
is aware of that information.
Matters included in the Strategic Report
The company has chosen, in accordance with Companies Act 2006, s. 414C(11), to set out in the company's Strategic Report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sh. 7 to be contained in the Directors' Report. It has done so in respect of future developments.
HLMAD LIMITED
T/A HLM ARCHITECTS
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2021
- 5 -
On behalf of the board
R O'Neil
Director
22 December 2021
HLMAD LIMITED
T/A HLM ARCHITECTS
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 MARCH 2021
- 6 -
The directors are responsible for preparing the strategic report, directors' report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
-
select suitable accounting policies and then apply them consistently;
-
make judgements and accounting estimates that are reasonable and prudent;
-
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
HLMAD LIMITED
T/A HLM ARCHITECTS
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF HLMAD LIMITED
- 7 -
Opinion
We have audited the financial statements of HLMAD Limited
(the 'company')
for the year ended 31 March 2021 which comprise
the Profit and Loss Account, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement
and
notes to the financial statements, including significant accounting policies
. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including
Financial Reporting
S
tandard
102
The Financial Reporting Standard applicable in the UK and Republic of Ireland
(United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
-
give a true and fair view of the state of the company's affairs as at 31 March 2021 and of its profit for the year then ended;
-
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
-
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the
Auditor
responsibilities for the audit of the
financial statements
section of our report. We are independent of the
company
in accordance with the ethical requirements that are relevant to our audit of the
financial statements
in the UK, including the FRC’s Ethical Standard
, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
HLMAD LIMITED
T/A HLM ARCHITECTS
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HLMAD LIMITED
- 8 -
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit
:
-
the information given in the strategic report and the directors'
r
eport for the financial year for which the financial statements are prepared is consistent with the financial statements
; and
-
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of our knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identifie
d
material misstatements in the strategic report and the directors'
r
eport
.
We have nothing to report in respect of the following matters
in relation to which
the Companies Act 2006 requires us to report to you if, in our opinion:
-
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
-
the financial statements are not in agreement with the accounting records and returns; or
-
certain disclosures of
remuneration specified by law are not made; or
-
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors'
r
esponsibilities
s
tatement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of
financial statements
that are free from material misstatement, whether due to fraud or error. In preparing the
financial statements
, the
directors are
responsible for assessing the company
'
s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
directors
either
intend
to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the
financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor's
report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with
ISAs (UK)
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements
.
HLMAD LIMITED
T/A HLM ARCHITECTS
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HLMAD LIMITED
- 9 -
Extent to which the audit is considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
We obtained an understanding of the legal and regulatory frameworks that are applicable to the company, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The most relevant frameworks we identified include:
We gained an understanding of how the company is complying with these laws and regulations by making enquiries of management and those charged with governance. We corroborated these enquiries through our review of submitted returns.
We assessed the susceptibility of the company’s financial statements to material misstatement, including how fraud might occur, by meeting with management and those charged with governance to understand where it was considered there was susceptibility to fraud. We considered the overall control environment and how management and those charged with governance oversee the implementation and operation of controls. In areas of the financial statements where the risks were considered to be higher, we performed procedures to address each identified risk.
The following procedures were performed to provide reasonable assurance that the financial statements were free of material fraud or error:
-
Reviewing minutes of meetings of those charged with governance;
-
Reviewing the level of and reasoning behind the company’s procurement of legal and professional services;
-
Performing audit work procedures over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing judgements made by management in their calculation of accounting estimates for potential management bias.
Our audit procedures were designed to respond to the risk of material misstatements in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve intentional concealment, forgery, collusion, omission or misrepresentation. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://
www.frc.org.uk/Our-Work/Audit/Audit-and-assurance/Standards-and-guidance/Standards-and-guidance-for-auditors/Auditors
-responsibilities-for-audit/Description-of-auditors-responsibilities-for-audit.aspx. This description forms part of our auditor’s report.
HLMAD LIMITED
T/A HLM ARCHITECTS
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HLMAD LIMITED
- 10 -
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
Allison Dalton (Senior Statutory Auditor)
For and on behalf of Johnston Carmichael LLP
23 December 2021
Chartered Accountants
Statutory Auditor
227 West George Street
Glasgow
G2 2ND
HLMAD LIMITED
T/A HLM ARCHITECTS
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 MARCH 2021
- 11 -
2021
2020
Notes
£
£
Turnover
3
11,844,227
12,953,802
Cost of sales
(7,204,266)
(7,054,231)
Gross profit
4,639,961
5,899,571
Administrative expenses
(4,454,374)
(5,397,015)
Other operating income
333,524
Operating profit
4
519,111
502,556
Interest payable and similar expenses
7
(45)
Profit before taxation
519,111
502,511
Taxation
8
27,407
515,194
Profit for the financial year
546,518
1,017,705
The profit and loss account has been prepared on the basis that all operations are continuing operations.
HLMAD LIMITED
T/A HLM ARCHITECTS
BALANCE SHEET
AS AT 31 MARCH 2021
31 March 2021
- 12 -
2021
2020
Notes
£
£
£
£
Fixed assets
Tangible assets
10
207,500
263,110
Current assets
Debtors
11
4,049,680
4,122,973
Cash at bank and in hand
1,165,231
828,659
5,214,911
4,951,632
Creditors: amounts falling due within one year
12
(3,827,354)
(3,206,203)
Net current assets
1,387,557
1,745,429
Total assets less current liabilities
1,595,057
2,008,539
Capital and reserves
Called up share capital
15
140,000
140,000
Capital redemption reserve
16
60,000
60,000
Profit and loss reserves
17
1,395,057
1,808,539
Total equity
1,595,057
2,008,539
The financial statements were approved by the board of directors and authorised for issue on 22 December 2021 and are signed on its behalf by:
R O'Neil
M Staniland
Director
Director
Company Registration No. 05047778
HLMAD LIMITED
T/A HLM ARCHITECTS
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2021
- 13 -
Share capital
Capital redemption reserve
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 April 2019
140,000
60,000
910,834
1,110,834
Year ended 31 March 2020:
Profit and total comprehensive income for the year
-
-
1,017,705
1,017,705
Dividends
9
-
-
(120,000)
(120,000)
Balance at 31 March 2020
140,000
60,000
1,808,539
2,008,539
Year ended 31 March 2021:
Profit and total comprehensive income for the year
-
-
546,518
546,518
Dividends
9
-
-
(960,000)
(960,000)
Balance at 31 March 2021
140,000
60,000
1,395,057
1,595,057
HLMAD LIMITED
T/A HLM ARCHITECTS
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2021
- 14 -
2021
2020
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
22
1,009,547
244,545
Interest paid
(45)
Income taxes refunded
340,662
246,235
Net cash inflow from operating activities
1,350,209
490,735
Investing activities
Purchase of tangible fixed assets
(53,637)
(187,804)
Net cash used in investing activities
(53,637)
(187,804)
Financing activities
Dividends paid
(960,000)
(120,000)
Net cash used in financing activities
(960,000)
(120,000)
Net increase in cash and cash equivalents
336,572
182,931
Cash and cash equivalents at beginning of year
828,659
645,728
Cash and cash equivalents at end of year
1,165,231
828,659
HLMAD LIMITED
T/A HLM ARCHITECTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2021
- 15 -
1
Accounting policies
Company information
HLMAD Limited is a
company
limited by shares
incorporated in
England and Wales
.
The registered office is
Wool + Tailor Building, Fifth Floor, 10-12 Ailie Street, London, E1 8DE.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in
sterling
, which is the functional currency of the company.
Monetary a
mounts
in these financial statements are
rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares
publicly available consolidated financial statements
, including this company,
which are
intended to give a true and fair view of the assets, liabilities,
financial position and profit or loss
of the group
.
T
he company has
therefore
taken advantage of
e
xemptions from the following disclosure requirements:
-
Section 4 ‘Statement of Financial Position’ – Reconciliation of the opening and closing number of shares
;
-
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’ – Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income
;
-
Section 26 ‘Share based Payment’ – Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements
;
-
Section 33 ‘Related Party Disclosures’ – Compensation for key management personnel
.
The financial statements of the company are consolidated in the financial statements of
Covalent Group Limited
. These consolidated financial statements are available from its registered office,
Wool + Tailor Building Fifth Floor, 10-12 Ailie Street, London E1 8DE.
1.2
Going concern
The directors have prepared cash flow projections through to December 2022 which show that the company will have sufficient resources to allow it to meet its financial liabilities as they fall due for at least 12 months from the date of approval of these financial statements.
true
The directors have also considered the impact of the Global COVID-19 pandemic which continues to create uncertainty for global economies. The company has continued to trade through the associated disruption and, while impacted, has managed the risks from the pandemic by utilising the government furlough and VAT deferral support schemes. The directors are confident that they can continue to manage any further short term operational or commercial challenges presented by the pandemic.
Based on these factors, the directors are satisfied that it remains appropriate for the company to prepare its financial statements on a going concern basis.
HLMAD LIMITED
T/A HLM ARCHITECTS
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2021
1
Accounting policies
(Continued)
- 16 -
1.3
Turnover
Turnover represents the invoices, net of VAT, raised in the year which are adjusted for movements in the level of amounts recoverable on contracts.
Contracts are assessed on a contract by contract basis and reflected in the profit and loss account by recording turnover and related costs as contract activity progresses. Turnover is ascertained in a manner appropriate to the stage of completion of the contract and credit is taken for profit earned to date when the outcome of the contract can be assessed with reasonable certainty.
Turnover is only recognised in the financial statements when there is a contractual right to consideration.
1.4
Tangible fixed assets
Tangible fixed assets
are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:
Leasehold Improvements
- 5 years straight line
Equipment
- 5 years straight line
Fixtures and fittings
- 5 to 10 years straight line
Computer equipment
- 2 to 3 years straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and
is credited or charged to profit and loss
.
1.5
Impairment of fixed assets
At each reporting
period
end date, the
company
reviews the carrying amounts of its tangible
assets to determine whether there is any indication that those assets have suffered an impairment loss.
1.6
Cash and cash equivalents
Cash and cash equivalents
are basic financial assets
and
include cash in hand, deposits held at call with banks and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.7
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset
, with
the net amounts presented in the financial statements
,
when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include
debtors
and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest
method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Financial assets classified as receivable within one year are not amortised.
HLMAD LIMITED
T/A HLM ARCHITECTS
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2021
1
Accounting policies
(Continued)
- 17 -
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in
profit
or
loss
, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those
held
at
fair value through profit and loss
, are assessed for indicators of impairment at each reporting end date.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when
the company
transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including trade and other payables,
and
loans from
fellow group companies
,
are
initially recognised at transaction price unless the arrangement constitutes a
financing transaction, where the debt instrument is measured at the present value of
the future receipts discounted at a market rate of interest.
Trade payables are obligations to pay for goods or services that have been acquired
in the ordinary course of business from suppliers. Accounts payable are classified as
current liabilities if payment is due within one year or less. If not, they are presented
as non-current liabilities. Trade payables are recognised initially at transaction price
and subsequently measured at amortised cost using the effective interest method.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
1.8
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.9
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the
profit and loss account
because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The
company’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
HLMAD LIMITED
T/A HLM ARCHITECTS
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2021
1
Accounting policies
(Continued)
- 18 -
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the
profit and loss account
, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the
company
has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.10
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or
fixed assets
.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.11
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.12
Leases
Rentals payable under operating leases,
including
any lease incentives received, are charged to
profit or loss
on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease
s
asset are consumed.
1.13
Government grants
Government grants are recognised at the fair value of the asset receive
d
or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
Government grants are recognised in accordance with the performance model.
A grant that specifies performance conditions is recognised in income when the performance conditions are met
. Where a
grant does not specify performance conditions
it
is recognised in income when the proceeds are received or receivable
. A grant received before the recognition criteria are satisfied is recognised as a liability.
1.14
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation
in the period
are included in profit or loss.
HLMAD LIMITED
T/A HLM ARCHITECTS
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2021
- 19 -
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are
as follows.
Stage of completion on contracts
The company undertakes contracts which take place over a period of time and revenue and profits are recognised as the company performs under these contracts. The extent to which revenue and profits have been earned involves an assessment of both the total expected contract costs and the final expected contract margin. While management make every effort to accurately estimate costs at the beginning of a project, this can be subject to revision as the work progresses and the picture becomes clearer.
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2021
2020
£
£
Turnover analysed by class of business
Provision of design services
11,844,227
12,953,802
2021
2020
£
£
Turnover analysed by geographical market
United Kingdom
10,981,903
12,637,194
Rest of the world
862,324
316,608
11,844,227
12,953,802
2021
2020
£
£
Other significant revenue
Grants received
333,524
Grants receivable are amounts received from the Government's Coronavirus Job Retention Scheme.
HLMAD LIMITED
T/A HLM ARCHITECTS
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2021
- 20 -
4
Operating profit
2021
2020
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange differences apart from those arising on financial instruments measured at fair value through profit or loss
26,771
5,964
Government grants
(333,524)
Fees payable to the company's auditor for the audit of the company's financial statements
17,000
15,500
Depreciation of owned tangible fixed assets
107,872
127,605
Loss on disposal of tangible fixed assets
1,375
Operating lease charges
470,793
492,963
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2021
2020
Number
Number
Architectural and design staff
128
132
Administration staff
13
17
Total
141
149
Their aggregate remuneration comprised:
2021
2020
£
£
Wages and salaries
4,807,509
4,759,876
Social security costs
422,624
512,519
Pension costs
57,302
172,156
5,287,435
5,444,551
6
Directors' remuneration
2021
2020
£
£
Remuneration for qualifying services
379,817
394,604
Company pension contributions to defined contribution schemes
57,302
53,423
437,119
448,027
HLMAD LIMITED
T/A HLM ARCHITECTS
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2021
6
Directors' remuneration
(Continued)
- 21 -
Remuneration disclosed above include the following amounts paid to the highest paid director:
2021
2020
£
£
Remuneration for qualifying services
89,224
95,376
Company pension contributions to defined contribution schemes
31,633
27,917
7
Interest payable and similar expenses
2021
2020
£
£
Interest on bank overdrafts and loans
45
45
8
Taxation
2021
2020
£
£
Current tax
UK corporation tax on profits for the current period
(187,351)
Adjustments in respect of prior periods
(21,099)
(340,392)
Total current tax
(21,099)
(527,743)
Deferred tax
Origination and reversal of timing differences
(4,714)
12,549
Adjustment in respect of prior periods
(1,594)
Total deferred tax
(6,308)
12,549
Total tax credit
(27,407)
(515,194)
HLMAD LIMITED
T/A HLM ARCHITECTS
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2021
8
Taxation
(Continued)
- 22 -
The actual credit for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2021
2020
£
£
Profit before taxation
519,111
502,511
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2020: 19.00%)
98,631
95,477
Tax effect of expenses that are not deductible in determining taxable profit
1,697
21,538
Additional deduction for research and development
(293,153)
Adjustments in respect of prior years
(21,099)
(340,392)
Net group relief
(107,011)
Depreciation on assets not qualifying for tax allowances
1,969
4,170
Deferred tax adjustments in respect of prior years
(1,594)
Adjust deferred tax to average rate of 19%
(2,834)
Taxation credit for the year
(27,407)
(515,194)
9
Dividends
2021
2020
£
£
Interim paid
960,000
120,000
HLMAD LIMITED
T/A HLM ARCHITECTS
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2021
- 23 -
10
Tangible fixed assets
Leasehold Improvements
Equipment
Fixtures and fittings
Computer equipment
Total
£
£
£
£
£
Cost
At 1 April 2020
572,819
96,904
122,482
1,063,331
1,855,536
Additions
24,725
2,906
26,006
53,637
Disposals
(1,375)
(1,375)
At 31 March 2021
597,544
99,810
121,107
1,089,337
1,907,798
Depreciation and impairment
At 1 April 2020
482,370
92,039
81,863
936,154
1,592,426
Depreciation charged in the year
31,326
2,180
14,267
60,099
107,872
At 31 March 2021
513,696
94,219
96,130
996,253
1,700,298
Carrying amount
At 31 March 2021
83,848
5,591
24,977
93,084
207,500
At 31 March 2020
90,449
4,865
40,619
127,177
263,110
11
Debtors
2021
2020
Amounts falling due within one year:
£
£
Trade debtors
3,069,828
2,641,304
Amounts recoverable on contracts
499,824
456,174
Corporation tax recoverable
319,563
Amounts due from fellow group undertakings
7,498
276,040
Other debtors
59,423
107,526
Prepayments and accrued income
395,263
310,830
4,031,836
4,111,437
Deferred tax asset (note 13)
17,844
11,536
4,049,680
4,122,973
HLMAD LIMITED
T/A HLM ARCHITECTS
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2021
- 24 -
12
Creditors: amounts falling due within one year
2021
2020
£
£
Payments received on account
448,067
321,422
Trade creditors
927,353
1,010,968
Amounts owed to group undertakings
246,670
Taxation and social security
1,066,322
834,339
Other creditors
200,272
26,563
Accruals and deferred income
938,670
1,012,911
3,827,354
3,206,203
13
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Assets
Assets
2021
2020
Balances:
£
£
ACAs
12,797
9,003
Other short-term timing differences
5,047
2,533
17,844
11,536
2021
Movements in the year:
£
Asset at 1 April 2020
(11,536)
Credit to profit or loss
(6,308)
Asset at 31 March 2021
(17,844)
14
Retirement benefit schemes
2021
2020
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
57,302
112,790
The company operates a defined contribution pension scheme for all qualifying employees.
The assets of the scheme are held separately from those of the company in an independently administered fund.
HLMAD LIMITED
T/A HLM ARCHITECTS
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2021
- 25 -
15
Share capital
2021
2020
2021
2020
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
140,000
140,000
140,000
140,000
There is one class of ordinary share which carries full voting rights but no right to fixed income or repayment of capital. Distributions are at the discretion of the company.
16
Capital redemption reserve
The capital redemption reserve is the cumulative value of share capital previously issued which has been redeemed by the company.
17
Profit and loss reserves
Profit & loss reserves are the cumulative profits and losses incurred by the company since incorporation and not distributed to the shareholders.
18
Financial commitments, guarantees and contingent liabilities
The company is party to a cross-company guarantee given to the group's bankers for the debts of its fellow group undertakings. The aggregate amount owed by HLMAD Limited's fellow group undertakings at 31 March 2021 is £460,229 (2020 - £615,537).
19
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2021
2020
£
£
Within one year
302,858
245,469
Between two and five years
526,302
787,161
829,160
1,032,630
20
Related party transactions
Transactions with related parties
The company has taken advantage of the exemption available in respect of Section 33.1a of FRS 102, which exempts the company from disclosing transactions with other group companies which are wholly owned subsidiaries.
There is a cross company guarantee provided to the group's bankers in respect of the company and its fellow group undertakings.
HLMAD LIMITED
T/A HLM ARCHITECTS
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2021
- 26 -
21
Ultimate controlling party
The immediate parent company is Covalent Group Limited, which has a registered office at Wool + Tailor Building Fifth Floor, 10-12 Alie Street, London, E1 8DE.
The ultimate controlling party is HLM+LD Employee Trust, which has its registered office at Wool + Tailor Building Fifth Floor, 10-12 Alie Street, London, E1 8DE.
The largest and smallest group into which the company is concolidated is Covalent Group Limited. Copies of the consolidated accounts are available from Companies House.
22
Cash generated from operations
2021
2020
£
£
Profit for the year after tax
546,518
1,017,705
Adjustments for:
Taxation credited
(27,407)
(515,194)
Finance costs
45
Loss on disposal of tangible fixed assets
1,375
Depreciation and impairment of tangible fixed assets
107,872
127,605
Movements in working capital:
(Increase)/decrease in debtors
(239,962)
366,103
Increase/(decrease) in creditors
621,151
(751,719)
Cash generated from operations
1,009,547
244,545
23
Analysis of changes in net funds
1 April 2020
Cash flows
31 March 2021
£
£
£
Cash at bank and in hand
828,659
336,572
1,165,231
2021-03-31
2020-04-01
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R O'Neil
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